3 reasons to learn distributive bargaining
- u will face dsitributie situations
- u need to know how to counter when anothe rperson is distirbutive wiht you
- every engotiation has dist neg elements!
Target point
resistance/reservation point
Asking price
the optimal goal for one party
beyond which a negotiator would rather have no deal
what is the initial offer
initial price is stated outright during negotiatons
target price is inferred through the process of negotaiton
reservation point may NOT EVEN BE REVEELAED
What can you infer about the reservaiton point
may infer that the other’s resistance point was near the last offer the other was willing to consider before the negotiation ended.
Other terms for zopa
bargaiing range, settlement range
how does target price influence the result of the negotiation?
Negotiaton outcomes and satisfaction with outcomes
BATNA
WATNA
best alt to negotation agreement
worst alt to negotiation agreement
what does a strong batna do?
give the negotiator more power-> cuz they can simply walk away
4 ways to influence others resistance point
- reduce the opps estimate of our cost if the deal moves slowly: if they think we do not mind the deal taking time, they are less likely to have a high RP
- Increase the opps estimate of their own cost if the deal moves slowly: if they feel they will pay more without a deal struck or if the negotiation is slow, then they will have a lower RP
- Reduce the opps perceived value of an issue: degrade the issue and convince them it is not worth that much!
- increase the opps percieved value of an issue: if you convince them ana issue matters to you A LOT! then they will be looser with the RP
4 tactical tasks to consider in distributive negotiation scenario
a. assess others rp, target, cost of terminating negotitations [gain info!! either directly through negotiation or indirectly through research]
b. manage theri perceptions of MY rp, target, cost of terminating negotitations [METHOD #1: screen the info you give; by 1. concelaing info 2. calculated incompetence (choosing a negotiation agent and not giving them info so they cant reveal it by accident) 3. (having 1 spokesperson) 4. (SNOW JOB!)]
[METHOD #2: DIRECT ACTION;
1. SELECTIVE PRESENTATION: only present favourable info items from neutral sources, or 2. say “if i were in your shoes, heres what i would do”, 3. SHOW an emotional reaction to an offer! THE FLINCH/DEMUR]
c. modify their own perceptions of their own rp, target, cost of terminating negotitations [Highlighting overlooked items,
d. manipulate acc cost of delaying/terminating negotiations (plan disruptive action [ increase the costs of not reaching a negotiated agreement through disruptive action ex: atheletes venting on social media for mgmt issues! public appeal],
form an alliance with outsiders [involve other parties who can somehow influence the outcome in the process, ex :threatening to report], and manipulate the scheduling of negotiation[ increase time pressure on negotiators])
2 factors for negotiators to be sensitive to when creating offers
- value characteristics, which are how much the issues and options of different issues are worth to a negotiator; and
- content characteristics, which involve the way the negotiation is constructed (number of issues, possible options, etc.).
Negotiators need to be aware that parties may differ in not only the value they place on different issues but also how they construct the negotiation space itself.
is it better to make a first offer?
anchors the negotiation
There is research evidence that even “phantom anchors” can lead to better economic outcomes in negotiations.
what are phantom anchors
Phantom anchors are statements like “I was going to ask for $10,000, but I can offer $8,000.
research has shown that more precise opening offers (for instance, $20.15) lead to more modest counteroffers from the other negotiator and better agreement outcomes for those that use precise opening offers rather than rounded opening offers (for instance, $20)
how to weaken first offer advantage
by concentrating on own target and RP
Studies indicate that negotiators who make exaggerated opening offers get higher settlements than do those who make low or modest opening offers.
- it gives the negotiator room for movement and therefore allow them time to learn about the other party’s priorities.
- an exaggerated opening offer acts as a meta-message and may create, in the other party’s mind, the impression that:
-there is a long way to go before a reasonable settlement will be achieved,
-more concessions than originally intended may have to be made to bridge the difference between the two opening positions, and
-the other may have incorrectly estimated their own resistance point.
Two disadvantages of an exaggerated opening offer are that
it may be summarily rejected by the other party and halt negotiations prematurely, and
it communicates an attitude of toughness that may be harmful to long-term relationships.
2 TYPES OF OPENING STANCES
cometitive or moderate
alernatively belligerent (trying to attack their offers)
12 guidelines for making concessions
- concede on small issues not major ones
- never make two concessions in a row
- given an initial offer that gives you room to make concessions
- Give yourself enough room to make concessions.
- Try to get the other party to start revealing their needs and objectives first.
- Be the first to concede on a minor issue but not the first to concede on a major issue.
- Make unimportant concessions and portray them as more valuable than they are.
- Make the other party work hard for every concession you make.
- Use trade-offs to obtain something for every concession you make.
- Generally, concede slowly and give a little with each concession.
- Do not reveal your deadline to the other party.
- Occasionally say “no” to the other negotiator.
- Be careful trying to take back concessions even in “tentative” negotiations.
- Keep a record of concessions made in the negotiation to try to identify a pattern.
- Do not concede “too often, too soon, or too much.”
does a take it or leave it approach work?/fait accompli
no! only considers one party and people have resentment
why does the pattern of concessionmaking matter?
because of concessionsa re getting smaller: we are getting closer to resistance point
how are final offers indicated?
A good negotiator will say, “This is all I can do” or “This is as far as I can go.”
let the absence of any further concessions convey the message in spite of urging from the other party. The other party may not recognize at first that the last offer was the final one and might volunteer a further concession to get the other to respond. may result in bitterness
make the last concession more substantial. This implies that the negotiator is throwing in the remainder of the negotiating range.
A concession may also be personalized to the other party (“I went to my boss and got a special deal just for you”), which signals that this is the last concession the negotiator will make.
5 ways to close a deal
- provide alts not just 1 final offer
- assume the close (dont directly say that the deal is done but act like it is)
- Split the diff: do a summative statement and split the remaining issues
- Exploding offer
- sweetner: throw in a nice thing
what are the results of hardball tactics
harm to reputation, lost deals, negative publicity, and consequences of the other party’s revenge.
